HINDUSTAN TIN WORKS LTD., NEW DELHI V. DCIT, CIRCLE- 11(2), NEW DELHI

ITA 6080/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0601 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 28-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 143(3); 37(1); 201; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: C NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.6080/DEL./2017 ASSESSMENT YEAR: 2014-15 M/S. HINDUSTAN TIN WORKS LTD., M.L. PURI & CO., 407, NEW DELHI HOUSE, 27, BARAKHAMBA ROAD, NEW DELHI VS. DCIT, CIRCLE-11(2), NEW DELHI PAN :AAACH2597Q (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 16/08/2017 PASSED BY THE LEARNED CIT(APPEALS)-35, N EW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 201 4-15 RAISING FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERR ED IN DISMISSING THE APPEAL OF APPELLANT COMPANY AND RETA INING DISALLOWANCE OF RS.4,82,677/-IN THE ORDER PASSED BY LD. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-N(2) NEW DELHI U/ S 143(3) OF THE INCOME TAX ACT, 1961. APPELLANT BY SHRI MADUR AGGARWAL, ADV. RESPONDENT BY SHRI F.R. MEENA, SR.DR DATE OF HEARING 17.12.2020 DATE OF PRONOUNCEMENT 17.12.2020 2 ITA NO. 6080/DEL./2017 2. THAT LD. CIT (APPEAL)-35 NEW DELHI GROSSLY ERRE D IN LAW AND ON FACTS WHILE SUSTAINING A DISALLOWANCE OF RS. 4,82,6 77/- TREATING A BUSINESS EXPENDITURE DEBITED UNDER THE HEAD CAN-VI ROMENT EXPENSES A/C AS CORPORATE SOCIAL RESPONSIBILITIES EXPENDITURE. 3. THAT THE ORDER PASSED BY THE LD. CIT (APPEAL) N EW DELHI, BEING ERRONEOUS IN LAW AND ON FACTS TO THE EXTENT OF AFOR ESAID DISALLOWANCE. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TIN CAN S/PRINTED LAC SHEETS/COMPONENTS AND TRADING IN TINPLATE. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF IN COME ON 30/09/2014 DECLARING TOTAL INCOME OF 11,54,33,330/-. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTICES UNDER THE INCOME-T AX ACT, 1961 (IN SHORT THE ACT) WERE ISSUED AND COMPLIED WITH. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED ON 30/11/2016 AFTER MAKING CERTAIN ADDITIONS/DISALLOWA NCES. AGGRIEVED WITH THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT(A) WHO PARTLY A LLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE SUSTAINE NCE OF DISALLOWANCE OF 4,82,677/- DEBITED UNDER THE HEAD CANVIROMENT EXPENSES ACCOUNT, THE ASSESSEE IS BEF ORE THE TRIBUNAL, RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US, BOTH THE PARTIES APPEARED THROUGH VIDEOCONFERENCING FACILITY. THE LEARNED COUNSEL OF T HE ASSESSEE SUBMITTED THAT ISSUE IN DISPUTE IS COVERED BY THE O RDER OF THE TRIBUNAL IN ASSESSMENT YEAR 2012-13 AND 2013-14 AND , THEREFORE, DISALLOWANCE NEED TO BE DELETED. 3 ITA NO. 6080/DEL./2017 4. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT ORDERS OF THE L OWER AUTHORITIES AS WELL AS THE ORDERS OF THE TRIBUNAL. THE ASSESSEE INCURRED FOLLOWING EXPENSES UNDER THE HEAD CANVIRO MENT WEEK EXPENSES: DATE OF VOUCHER NATURE OF EXPENSES AMOUNT IN IN R 31/05/2013 ASSOCIATION FEE FOR CONDUCTING EVENT KNOWN AS CANVIROMENT WEEK 35,000 01/06/2013 CONVEYANCE EXPENSES 1600 23/08/2013 MEDIA COVERING EXPENSE 30,899 09/09/2013 WEBSITE MAINTENANCE EXPENSES WWW. CANVIRONMENTWEEK. COM 15,730 11/09/2013 SPONSORSHIP EXPENSES 2,06,180 22/11/2013 BUS HIRING FOR EVENT 10,100 23/11/2013 MEDIA EXPENSE 35,955 30/11/2013 AUDITORIUM FEE 49,618 04/03/2014 HEALTH CAMP FOR RIG PACKERS 97,595 TOTAL 4,82,677 6. ACCORDING TO THE ASSESSEE, ABOVE EXPENDITURE WAS R ELATED TO PROMOTION AND SPREADING AWARENESS ABOUT SUSTAINABIL ITY AND ENVIRONMENTALLY FRIENDLINESS OF METAL PACKAGING. TH E FUNDS WERE ALSO USED TO UPLIFT THE LIVES OF RAG PICKERS, WHO W ERE THE BEST ROUTE OF THE CONTRIBUTOR OF RECYCLING OF CANS BY PR OVIDING WITH THEIR HEALTH CHECKUP CAMP. IN VIEW OF THE ABOVE, AC CORDING TO THE ASSESSEE, EXPENSES WERE INCURRED FOR THE PURPOSE OF THE BUSINESS. HOWEVER, ACCORDING TO THE ASSESSING OFFICER EXPENDI TURE BEING NOT INCURRED DIRECTLY RELATED TO EARNING OF THE INCOME, IT WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS, AND ACCORDINGLY DISALLOWED THE SAME. THE ASSESSING OFFICER ALSO 4 ITA NO. 6080/DEL./2017 RELIED ON THE ORDER OF THE LD. CIT(A) FOR ASSESSMEN T YEAR 2013-14. THE LD. CIT(A) UPHELD THE DISALLOWANCE HOLDING THE SAME AS NOT INCURRED WHOLLY AND A SCRUTINY FOR THE PURPOSE OF T HE BUSINESS. 7. WE FIND THAT TRIBUNAL IN ITA NO. 5906/DEL/2016 FOR ASSESSMENT YEAR HAS DELETED THE DISALLOWANCE OF EXP ENDITURE OF SAME NATURE OBSERVING AS UNDER: 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE TRIBUNAL IN A.Y. 2012-13 HELD AS UNDER: 16. HONBLE KARNATAKA HIGH COURT IN CASE CITED AS CIT & ANR. VS. INFOSYS TECHNOLOGIES LTD. - (2014) 360 ITR 714 ALLOWED THE EXPENDITURE INCURRED BY INFOSYS TECHNOLOGIES LTD. O N ACCOUNT OF CSR BY INSTALLING TRAFFIC SIGNAL NEAR THE ESTABL ISHMENT TO EASE THE TRAFFIC CONGESTION U/S 37(1) OF THE ACT BY HOLDING THAT SUCH EXPENSES CAN BE HELD TO BE EXPANDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS U/S 37(1) O F THE ACT. 17. IN THIS CASE, THE ASSESSEE CLAIMED EXPENDITURE OF RS. 15,22,874/- UNDER THE HEAD CAN-VIROMENT WEEK EXPE NSES HAVING DETAILS AS UNDER:- DATE OF VOUCHER NATURE OF EXPENSES AMOUNT 14.07.2011 WEBSITE EXPENSES 27,575 08.12.2011 HEALTH CHECK-UP OF RAG PICKERS 37,303 26:12.2011 FILM MAKING 1,35,000 12.01.2012 ORGANIZING CAN - VIROMENT WEEK PROGRAMME 13,22,970 TOTAL 15,22,874 18. SO, WE ARE OF THE CONSIDERED VIEW THAT KEEPING IN VIEW THE TOTALITY OF THE AFORESAID CIRCUMSTANCES, THE ID . CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF CSR BY FOLLOWING THE DECISION RENDERED BY HONBLE K ARNATAKA HIGH COURT AS WELL AS FOLLOWING THE RULE OF CONSIST ENCY. SO, GROUND NO. 2 IS DETERMINED AGAINST THE REVENUE. THE ISSUE IN THE PRESENT ASSESSMENT YEAR IS ALSO ID ENTICAL. THE ASSESSING OFFICER AS WELL AS CIT(A) IGNORED THE FAC T THAT THE SAID EXPENDITURE WAS INCURRED RELATING TO PROMOTION AND SPREADING AWARENESS ABOUT SUSTAINABILITY AND ENVIRONMENTALLY FRIENDLINESS OF METAL PACKAGING WHICH IS IMPORTANT TO CANMAKING IND USTRY. THUS, 5 ITA NO. 6080/DEL./2017 THE EXPENSES INCURRED BY THE ASSESSEE ARE COMING UN DER PURVIEW OF SECTION 37(1) OF THE INCOME TAX ACT, 1961. THEREFOR E, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. THE EXPLANATION -2 HAS BEEN INSERTED BELOW THE SEC TION 37 (1) OF THE ACT WITH EFFECT FROM 01/04/2015 I.E. ASS ESSMENT YEAR 2015-16. ACCORDING TO THE SAID EXPLANATION, CORPORA TE SOCIAL RESPONSIBILITY EXPENDITURE INCURRED SHALL NOT BE DE EMED TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. THIS AMENDMENT BEING EFFECTIVE FROM ASS ESSMENT YEAR 2015-16, IS NOT APPLICABLE IN THE INSTANT ASSESSMEN T YEAR. THUS, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (S UPRA), WE DELETE THE ADDITION IN DISPUTE IN THE YEAR UNDER CONSIDERA TION. THE GROUNDS OF THE APPEAL ACCORDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2020. SD/- SD/- (AMIT SHUKLA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH DECEMBER, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI